Welcome to Freescale’s First Quarter 2012 Results Conference Call. All lines have been placed in listen-only mode until the question-and-answer session. Today’s call is being recorded. If anyone has any objections, you may disconnect at this time.

I will now turn the meeting over to Mitch Haws. Sir, you may begin.

Mitch Haws

Thanks, Kim, and welcome to all of you to our first quarter 2012 earnings conference call. With me today is Rich Beyer, our Chairman and CEO, and Alan Campbell, our Chief Financial Officer. Before we begin today’s prepared remarks, let me remind everyone that today’s discussion does contain forward-looking statements that are based on our current outlook and as such they will include certain risks and uncertainties.

Please refer to our press release our Form 10-K and other filings with the SEC for a more detailed discussion of the specific risk factors that could cause the actual results to differ materially. Also, we will reference certain non-GAAP financial measures and we will post the appropriate GAAP financial reconciliation’s to our website at freescale.com.

With that, let me turn the call over to, Rich.

Rich Beyer

Good afternoon and welcome to our first quarter conference call. I will take a few minutes to summarize the highlights of the quarter after which Alan will provide more details on the financial results then I’ll provide some highlights on our target markets followed by our guidance for Q2. Q1 was challenging but didn’t mark what appears to be the end of the sequential declines in revenue we’ve experienced on the past few quarters.

As we had in prior quarters, we managed gross margin and operating expenses effectively allowing us to deliver a overall results consistent with our outlook in the consensus. Looking at some of the specifics revenues were $950 million, which represented a decrease of 6% sequential.

Gross margins were 42.3%, a 160 basis points below Q4 well above the TARP we saw in gross margins during the last downturn in 2009. This performance generated an adjusted net loss of $9 million and a loss of $0.04 per share. We did see booking strengthen in the quarter and our Q2 backlog improved over Q1 levels entering Q1 in January.

Now Alan will provide additional details.

Alan Campbell

Well good afternoon and thank you again for joining today’s call. As Rich said, Q1 was challenging while we continued to executing well on gross margins, operating expenses and cash. As I review the financial results in more detail, please note that I will be focusing on the results excluding the impact of sales in one-time items and adjustments. We believe this to be a more meaningful representation of our ongoing financial performance.

Please also note that the majority of the purchase accounting adjustments along are highlighted and the adjustment – such adjustments are no longer materially. In addition recalled on the 1st of January of this year we realigned our operations to create two new strategic product groups, Networking & Multimedia Solutions NMSG and Automotive, Industrial & Multi-Market Solutions AISG.

The NMSG includes our networking processors, our application processors on radio frequency products and AISG includes a microcontroller and analog and sensors products. We reported our sales consistent with the two product groups beginning this quarter. We have included our quarterly history of revenue by-product group on our website. We are looking at Q1 in more detail. Q1 was $950 million representing a sequential decrease of 6%. Sales declined by 20% compared to Q1 last year. AISG product sales in Q1 were $527 million, 4% below the fourth quarter and 15% below Q1 of last year.

Automotive sales declined both sequential and year-over-year due to slightly elevated inventory levels at some of our customers and weakness in European production. Sales in our industrial markets increased sequential but declined year-over-year due to the strong start we saw in early 2011.

NMSG revenues were $317 million in the quarter down 16% from Q4 and down 20% from last year. The primary driver of this sequential decline was seasonal weakness in our consumer business along with declines in our RF business due to elevated inventories as several networking customers our digital networking business is worst lately on a sequential basis. And year-over-year networking revenues were negatively impacted by lower demands and pockets of elevated inventory mainly in the wireless infrastructure market.

Cellular product sales were $66 million compared to $41 million in Q1 and $138 in the first quarter of last year. Other products which consists primarily of foundry sales and IP revenue, resulted in quarterly net sales of $40 million compared to $46 million in the fourth quarter from $39 million last year.

Finally, sales to distribution increased 14% sequentially and were down 17% compared to Q1 last year. Recall that the first half of 2011 was quite strong in the distribution channel. Our book-to-bill ratio in the first quarter was 1.05 this compares to the fourth quarter of 0.92.

Now, looking at gross margins and operating expenses, our gross margins were 42.3 compared to 43.9 in the fourth quarter. Our margins were negatively impacted on a sequential basis by lower sales volumes and product mix, but we managed to partly offset the impact through operational efficiencies, procurement savings and lower depreciation.